Steve’s definition of Organizational Debt is short and simple: “all the people/culture compromises made to “just get it done” in the early stages of a startup. ”

Just like technical debt can hinder your ability to scale your product, organizational debt hinders your ability to scale your company. Accruing these debts is sometimes the right business decision to make. But you need to be aware that you’re taking them on, and have a well defined trigger for identifying when you should stop whatever else you’re doing, and invest the time and focus in refactoring them.

Onboarding, training, culture and compensations, are a few examples of organizational systems that are likely to accrue organizational debt at the early stages of a startup.

A secondary theme that Steve calls out in his piece, is also worth noting: VCs tend to be not particularly good at helping their companies identify organizational debt and refactoring it. Fred Wilson also tangentially acknowledges that challenge in his “What VC can learn from PE” piece.

The “open space” physical space architecture, a core staple of modern tech/startup culture, seems to be getting some healthy criticism , over the last few months in particular. Representative examples can be found here and here. Responses arguing the exact opposite are abundant as well.

So who is right? Is open space the worst productivity-killer ever invented? Or an essential environment for collaboration and innovation?

Fortunately, science and a some smart people can shed light on a perspective that seems closer to the truth.

As it is almost always the case with complex problems, and human interactions is definitely such problem, the solution is more nuanced:

A physical architecture that is not aligned with the company’s culture will do more harm than good. You would not reap the benefits of an open space layout in a culture where employees feel judged based on the hours they spend in the office. Similarly, cubicles will not lead to productivity increases in a culture that champions collaboration and teamwork. Other cultural guidelines around noise, presence and use of space can have a meaningful impact as well.

Regardless of the broader culture, neither “extreme open-space” nor “extreme private-spaces” seem to offer a compelling trade-off of productivity and innovation. Both research (1, 2), and my own personal experience, suggest that optimal results require a space that has a mix of collaboration areas, quiet zones, team/project spaces and private nooks. If you’re looking for a real world example, the folks at TargetProcess wrote a great post about their new office space and how they want about designing it. For those of you who are more visually-inclined, here’s a quick teaser from the wonderful work that they did:

Using this framework, he then articulates the gaps that exist in the standard paradigm around the executive skill sets: while “managing” (they way Bungay defines it) often gets discounted, “directing” and “leading” tend to be merged together under “leadership”, even though the skills that are required to do each well are rather different (as one is dealing with concepts while the other is dealing with people) – which often leads to training people in one but not the other.

I know this sounds a bit abstract, so let’s bring it down to earth with a real world example. You know you have a good framework when others are using it without even knowing it.

Ameet Ranadive, a Product Manager at Twitter, wrote a nice post recently:

“Corporate leaders are expected to be bold generals who forecast the future, devise grand strategies, lead their troops into glorious battle – and then are fired at the first lost skirmish. It takes a courageous executive to push back against this mindset, admit the inherent uncertainty of the future, and emphasize learning and adapting over predicting and planning” – Eric Beinhocker

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“We may not be able to map the perfect route to the ideal future, but we can often ascertain some orienting principles for navigation. Without trying to predict exactly what forks in that road we will encounter, we can ask ourselves what will help us to make the best decisions when we do come to a fork. When we step back to look at the broader context and the general terrain and options in front of us, we can often come up with guidelines, such as “generally head east”, or “choose the easy roads even over the most direct roads”. A rule of thumb like this really helps when we’re confronted with a choice and want to benefit from wisdom generated when we had the luxury of pulling back and analyzing the bigger-picture context. When we distill that wisdom into memorable guidelines, we can apply them more easily and more regularly amidst the hustle and bustle of day-to-day execution.

This, then, is the form that strategy takes – an easy-to-remember rule of thumb that aids moment-to-moment decision making and prioritization (the technical term for such rule is a “heuristic”). I’ve found it useful to express these decision-support rules in the form of a simple phrase such as “emphasize X, even over Y”, in which X is one potentially valuable activity, emphasis, focus or goal, and Y is another potentially valuable activity, focus, emphasis or goal. Now, to make that useful, you can’t just have X be good and Y be bad. “Emphasize customer service, even over pissing off customers” is not helpful advice. Both X and Y need to be positives, so that the strategy gives you some sense of which one to privilege, for now, given your current context. For example, one of [my company’s] strategies earlier in our company’s development was “emphasized documenting and aligning to standards, even over developing and co-creating novelty”. Notice that both of those activities are positive things for an organization to engage in, but they are also polarities, in tension with each other. Our strategy is not a general, universal statement of value – in fact, if we tried to apply it forever it would undoubtedly cause serious harm eventually. There are times when it is essential to emphasize developing and co-creating novelty over documenting and aligning to standards. But for [us], given our context at the time, and the recent history before that, and the purpose we’re serving, that was our best sense of what to privilege, at least for a while: standardization, even at the expense of pursuing new and exciting opportunities.

Of course, no one was against the creation of novelty – for me, it often feels like the most natural way to operate. For the first few years of our growth, every event or training we did was unique and special, co-created on the fly with various partners who offered to host us and help market. This helped us to explore the new landscapes we were moving into, and it generated a lot of movement and some important relationships. But soon, our penchant for creating new and exciting offerings became unsustainable for that particular phase in our growth. It’s expensive when every new offering is a custom product and each partnership requires hammering out a unique deal. We arrived at the strategy I’ve cited so as to redress the balance, to stabilize the organization and make it more efficient and sustainable. It provided useful guidance and had a focusing effect as we navigated the daily decisions we each faced. And ultimately, the strategy became irrelevant – we had integrated these two poles pretty well and found the harmony between them, and it was time to focus elsewhere.As an example of how the standardization-first strategy helped: [since I’m responsible for] Program Design in our Education [team], from time to time I’d get an email from someone who had heard about [us], gotten inspired, and now wanted to partner to create a new type of event for his particular business sector. I get excited by opportunities like that, but out strategy reminded me that at that moment in our development, I should instead invest my time and energy in standardizing our existing programs and events – even if it means missing this new opportunity. “

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After the tough criticism I gave Holacracy last week, I wanted to use this opportunity to share something about Holacracy from a “glass half-full” perspective. This 5-paragraph excerpt from the book, beautifully describes a rather radical and unique take on what strategy can be.